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NXP Semi (NXPI) Tech Could Appear in Next iPhone, but Growth Won't Stop There (AAPL)

June 30, 2014 7:46 AM EDT

NXP Semi (Nasdaq: NXPI) is on watch Monday following a positive mention in the WSJ last weekend.

The WSJ said NXP's near-field communications technology is said to be included in the upcoming Apple (Nasdaq: AAPL) iPhone 6. But, if it isn't, the company should still be able to attract upside.

NXP's killer feature of its NFC tech is secure mobile payments. Beyond that, the company also draws about one-fifth of its revenue from the auto sector, with its transreceivers making sure that all electronics in the car communicate effectively. The company could benefit from car-to-car communications, whichwould make driving safer as a whole and might appear on something like self-driving vehicles, for instance. While NXP makes $25 per car sold now, car-to-car communications could add another $10 to $12 to that number in the next several years.

Shares of NXP go for about 12.5 times expected FY15 earnings, which is a 20 percent discount to the U.S.-listed sector. The company is also looking to cut debt to around two-times EBITDA.

NXP is flat in early trading Monday.



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